Fortina says it would pay less for contract change under current legal framework

The Fortina Group on Monday defended the valuation of properties which were subject to government contractual changes and said that should the same exercise be conducted today under the existing legal framework, the required waivers would have been obtained at a significantly lower cost than that to which it had committed.

The group issued a detailed statement after a report by the Auditor-General found that an independent valuation of the property was suppressed by the then chairman of the Lands Authority and the group therefore paid significantly less when it requested the government to change the conditions of a property transfer deal done several years ago.  

The group stressed that it holds absolute and unencumbered title to seafront property originally bought from private individuals in the 1960s and 1980s.  

The issue regarding restrictions concerned only part of the landlocked properties situated behind the privately owned Fortina land. The latter was acquired in ownership under three separate notarial deeds in 1991, 1996, and 2000 respectively.

"Contrary to erroneous assertions in certain media reports, these properties were held under full freehold ownership, not under emphyteusis, lease, or any form of conditional or temporary tenure," it said.

The Audit Office report concerned the removal of certain contractual restrictions, not the acquisition of any of the lands in question. The Group's ownership of the underlying properties was established decades ago and remains unaffected by the matters under review," it said.

The deeds of acquisition of 1991, 1996 and 2000 contained certain restrictive conditions, including requirements that designated portions of the lands be utilised for hotel extensions and, in certain instances, height limitations.

In 2017, acting within its contractual rights, the group said it sought approval from the Lands Authority to lift some of these restrictions on specifically designated portions of the properties, while maintaining its principal hotel business operations in full compliance with all applicable requirements.

Significantly, the contract of acquisition from the government of 2000 explicitly contemplated that any future waiver of height limitations on the relevant portion would not require additional consideration to the government.

It noted that legislation enacted in 2024 established a comprehensive framework governing valuations for condition waivers under government land contracts. This framework was not in existence when the Fortina Group submitted its application in 2017.

"Operating in the absence of such statutory guidance, the Group developed robust and defensible valuation methodologies based upon expert professional advice from qualified practitioners. Should the same exercise be conducted today under the existing legal framework, there is no doubt that the required waivers would have been obtained at a significantly lower cost than that to which Fortina has committed," it said.

'Significant methodological flaws in NAO report'

The Fortina said preliminary analysis of the National Audit Office report had identified significant methodological flaws in the valuations referenced therein, upon which it had serious and well-founded reservations.

It has therefore formally requested access to the complete valuation reports from the NAO—documentation that remains essential to any meaningful assessment of the report's conclusions.

"Despite the direct relevance of these materials to the Group's properties and the public importance of this matter, such documentation has not yet been provided. The Group respectfully submits that transparency and due process require access to these fundamental supporting materials," it said.

It said it remains committed to the completion of its comprehensive analysis of the NAO report and will provide further substantive commentary upon conclusion of that review.